The Elements of NCCI's Performance-Management Success

More than a decade later, NCCI Holdings Inc. reports that its approach has worked well. The not-for-profit organization continues to conduct reviews on individual performance every six months, as opposed to only doing it once a year. Chief human resources officer Bradley Kitchens says this frequency allows managers to reinforce what's working well and flag areas needing improvement.The approach also prevents problems from festering. "There are no big surprises at the end of the year," Kitchen says. She credits the reviews with fostering better communication, stronger rapport between supervisors and subordinates and a clear understanding by employees about where they stand in regards to their performance. The meetings also provide a safety net that ensures NCCI Holdings remains on track to meet individual and organizational goals."Employees feel informed and like the valuable feedback," Kitchens says. "In turn, happy employees work harder to make customers happy."In this 2002 piece, Workforce looks at the NCCI's approach to performance management.At NCCI Holdings, developing an innovative evaluation system has been asignificant factor in reducing turnover, pumping up performance, and improvingcompany revenues. These are the key elements:

Evaluate employees semi-annually, instead of once a year. More frequentevaluations are more work for supervisors, but they curb the tendency ofemployees to lose focus during that long time-span between reviews. Atwice-a-year system gives employees an opportunity to demonstrate improvementmore quickly.

Split the process into individual and corporate evaluations. A companyhas a need for both day-to-day competence and above-and-beyond creativity thathelps achieve larger goals. Evaluating each type of performance separately is away of ensuring that both are properly valued.

Show individuals precisely how they contribute to the organization'ssuccess. Take the scorecard of company-wide goals and figure out what eachdepartment can contribute to achieving them. Then break down the goals evenfurther, into pieces that an individual worker can have an impact upon. When aperson can see how an individual effort -- reducing the turnaround on paperwork,for example -- helps achieve higher profits, she is going to be more motivated toaccomplish it.

Link compensation to performance in a clear, tangible way. When employeesknow exactly what they have to accomplish to earn a pay raise or an end-of-yearbonus, they're better able to focus on achieving those goals. Eliminatingsurprises at evaluation-and-pay-raise time helps keep morale on an even keel.

Provide coaching to help employees achieve their goals. Evaluations helpemployees see how they're doing, but they still have to figure out how to usethe feedback to improve their performance. Well-trained corporate coaches canhelp them turn insights into specific action.